G.R. No. L-45278 August 28, 1985
NAPOLEON ANTAZO, petitioner, vs. PEOPLE OF THE PHILIPPINES and THE HON. COURT OF APPEALS, respondents.

FACTS

Petitioner Napoleon Antazo, a lawyer and retired municipal judge, owned a parcel of land in Binangonan, Rizal. On June 18, 1965, he entered into a contract of purchase and sale with Mariano Medina for a portion of the lot, identified as Lot No. 2-A-2. The contract stipulated that Antazo would deliver the title “free from all liens and encumbrances” upon Medina’s full payment of the purchase price, while ownership would remain with Antazo until such completion. However, on August 19, 1965, without Medina’s knowledge, Antazo mortgaged the entire parent lot, which included the portion sold, to the Binangonan Rural Bank. Medina completed his installment payments on July 16, 1966.
On August 12, 1966, Antazo executed a deed of absolute sale for Lot No. 2-A-2, again warranting in the document that the property was “free from all liens and encumbrances.” At that time, the mortgage in favor of the rural bank was still outstanding and was not discharged until August 14, 1971. Furthermore, a levy on execution from another civil case was annotated on the title in 1967. Upon discovering these encumbrances in 1970, Medina demanded a clear title, but Antazo failed to comply. Consequently, Antazo was charged with estafa under Article 316(2) of the Revised Penal Code. The trial court convicted him, and the Court of Appeals affirmed the conviction with a modification on the subsidiary imprisonment rate.

ISSUE

Whether petitioner Napoleon Antazo is guilty of estafa through deceit for falsely representing that the property sold was free from liens and encumbrances when it was, in fact, mortgaged.

RULING

Yes, the Supreme Court affirmed the conviction. The legal logic centers on the element of deceit under Article 316(2) of the Revised Penal Code. Antazo’s execution of a deed of absolute sale containing an explicit warranty that the property was “free from all liens and encumbrances,” despite his knowledge of the existing mortgage, constituted a clear false pretense or fraudulent representation. This misrepresentation was material, as it induced Medina to complete the payment and accept the deed, relying on Antazo’s assurance of a clear title.
The Court rejected Antazo’s defense that the recorded mortgage constituted constructive notice to Medina, thus negating deceit. The offense of estafa by means of deceit is consummated by the vendor’s false assertions, regardless of whether the encumbrance is a matter of public record. A vendee is not legally compelled to investigate the title in the Registry of Deeds and is entitled to rely on the vendor’s good faith representations, especially when the vendor is a lawyer and former judge presumed to be trustworthy. Antazo’s act of mortgaging the property after the contract of sale, without consent, and later affirming its clear status, demonstrated bad faith and a deliberate suppression of material facts to defraud the vendee. Therefore, all elements of estafa were present, warranting his criminal liability.